With a lack of traditional banking services, these neighborhoods were easy prey for this type of lending, Reuters reported. As the mortgage-backed securities market grew in the 1990s, the predatory lenders were able to offload their risky loans in the secondary market, the study, published in the American Sociological Review, said.

Redlining is when a bank denies or raises the cost of financial services to residents in a specific area.

By focusing on the data from the 100 largest U.S. metropolitan areas, the researchers found that living in an African-American area, and to a lesser extent a Hispanic area, were "powerful predictors of foreclosures."

Professor Douglas Massey of the Woodrow Wilson School of Public and International Affairs at Princeton University and PhD candidate Jacob Rugh wrote the study.